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QSR’s innovation in the face of rising operational costs

Things are changing rapidly in the world of quick-service restaurants.

QSRs are embracing new electronic ordering technologies, rethinking ideas of what constitutes a perfect employee, finding new ways of connecting with local communities, responding to pricing realities and developing an entirely new approach to employee advancement.

It’s a brave new world for quick service, but change doesn’t have to be scary for QSR employers or employees – not if it’s well thought out.

Following are seven buzzes or ideas that are circulating right now through the QSR sector. In varying degrees, you can expect to see all of these trends in the near future.


Look at your operations. Find out where the chaff is located. Focus like a laser on getting rid of inefficiencies. Make sure that everything fits together in a lean and mean sort of way.

In the new model for QSRs, you can’t afford to be carrying dead weight in your operation.

Electronic ordering – efficiency

Look around and you will already see evidence of a growing trend in the QSR world. Already, major QSR chains, like McDonald’s, are moving in this direction.

Electronic ordering, as it spreads, will open untold opportunities for QSRs way beyond the obvious time saving advantages of saving time and labor by using electronic POS systems.

Millennials, who love speed and convenience, want to be able to order on a smartphone, walk into your restaurant and pick up their order. A good smartphone app will help you connect with this vital segment of your potential market.

With ever rising costs of running a restaurant, automation that helps cut back on expenses may gather steam as a model for the future. People, however, do crave interaction with employees when they go to restaurants, the emphasis on efficiency and cutting down costs will drive more operators toward varying degrees of electronic ordering.

Electronic ordering – banking

Electronic ordering can also simplify your operation and save you precious time by hooking up your POS system to your bank. Think about how much easier your life as a restaurant operator will be with your customers’ payments going directly into your restaurant’s bank account. Simplify, simplify, simplify should be your mantra.

Re-thinking the perfect employee

It’s time to completely overhaul your ideas about your perfect employee. Now that wages are going up, expectations of your employees need to go up with those wages. The old model was entry-level, but if you’re paying more per hour than you were in years past, those expectations aren’t going to cut it anymore.

Ask yourself what you expect from a higher per hour employee. If you’re paying that wage, you should expect problem solving abilities, critical thinking and other skills beyond what you’d pay a minimum wage per hour worker.

Finding ways to be local

One of restaurants’ great strengths – across all segments of the industry – is their ability to connect with their communities. People celebrate the great occasions of their lives at restaurants – how many times have you seen a youth soccer team celebrating the end of its season at a local QSR? Or how often have you seen a restaurant sponsor a community team or take the lead in donating to a local charity? It happens all the time, and it’s part of what makes our industry a great one.

Even local franchisees within large QSR chains can and are finding ways of connecting themselves with their communities rather than allowing themselves to be viewed as a tiny cog within a corporate behemoth.

Increasingly, franchises are putting “locally owned” up front on their brands. Formerly, if you saw “locally owned,” it was often in the back – more or less out of sight, out of mind.

This is a smart move, especially in view of the big union-driven push for increased minimum wages. Often, the QSR corporate brands were used as targets to rally the union troops. If QSR franchisees are going to stop these kinds of attacks, they’re going to have to do everything they can to show their strong relationships with their local communities.

Facing pricing realities

It is of utmost importance for QSRs to use realistic pricing. If your costs are increasing by 50 percent, you can’t charge 50 percent less. We all know that restaurants have extremely narrow profit margins. Don’t engage in wishful thinking when it comes to pricing. Look out for your bottom line.

Be hard and logical. Even if you sell a lot of one particular item, if it costs a lot to produce, it might not be a great item to keep on selling. And make sure you have a good mix of high and low cost items.

Know the whys behind your pricing system rather than just the structure.

Outside/in employment ladders

One of the most intriguing models to emerge from regions with higher minimum wage is that of outside/in employment ladders.

What does this mean?

Simply put, in an outside/in employment model, cities like Seattle, with high minimum wages, are no longer training grounds for QSR. If operators are going to pay $15 per hour, they have a right to expect the very best performance from any employee that receives such a wage.

Expect to see chains with outlets in both Seattle and its lower wage suburbs to use those suburban outlets for training employees. In contrast, Seattle will be the place where operators move their strongest employees. It only makes sense to take your risks in lower wage areas. What you get that way is less turnover and lower training costs.

However you look at it, big changes are coming to the QSR world. Smart operators will embrace these innovations, experiment and find a sweet spot that works for them and their guests. Always remember, however, that you are not committed to any approach so long as you are transparent about it. Don’t be afraid to leave an approach if it doesn’t work.

With all of these new operational innovations, consumers will ultimately say “Yea” or “Nay.” As much as we want to be king of our kingdoms, the consumer still has the final say.

Author: MRA


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